New Delhi: Finance Minister Nirmala Sitharaman on Wednesday (May 13) announced that for the next three months employee provident fund (EPF) contribution will be 10 per cent each for employees and employers as compared to the statutory obligation of 12 per cent. The move is to increase take-home salary for employees and to give relief to employers in payment of provident fund.
The government has decided to continue EPF support for business and workers for 3 more months providing a liquidity relief of Rs 2,500 crores, the FM said. Under this new provision, the employers will continue to pay 12 per cent, while employees will have the option to pay 10 per cent for the next three months.
This will benefit nearly 3.6 lakh establishments and as many as 72.22 lakh employees will also avail this benefit, said FM Sitharaman.
The details of the Finance Minister's announcement on EPF contribution are:
1. Businesses need support to ramp up production over the next quarter.
2. It is necessary to provide more take-home salary to employees and also to give relief to employ, in payment of Provident Fund due.
In order to provide more take home salary for employees and to give relief to employers in payment of PF, EPF contribution is being reduced for Businesses & Workers for 3 months, amounting to a liquidity support of Rs 6750 crores. #AatmaNirbharBharatAbhiyan pic.twitter.com/VSysfvk4KU
— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
3. Therefore. statutory PF contribution of both employer and employee will be reduced to 10% each from the existing 12% each for all establishments covered by EPFO for the next 3 months.
4. CPSEs and state PSUs will, however, continue to contribute 12% as an employer contribution.
5. This scheme will be applicable for workers who are not eligible for 24% EPF support under PM Ginib Kalyan Package and its extension.
6. This will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees.
7. This will provide liquidity of Rs 6750 crore to employers and employees over 3 months.